Daimler, BAIC seeking $2 billion in loans for new production lines and an engine factory

The joint venture of Beijing Automobile Industry Holding Co. and Daimler AG is seeking 12.8 billion yuan ($2 billion) in loans from a group of banks for an engine factory and new production lines.

Chairman Xu Heyi of Beijing Auto confirmed this in an interview in the Chinese port city of Dalian, where he attended the World Economic Forum meetings. In June, Beijing Auto and Daimler inked a deal to invest 2 billion euros to manufacture four new models in China, construct a new R&D center and expand engine production.

The joint venture, called the Beijing Benz Automotive Co., currently produces around 80,000 C-class and "stretch" E-class sedans in China annually, says Autonews. Daimler revealed that it will boost production, but it did not disclose how much capacity it plans to add.

The new engine plant of the joint venture will begin producing four-cylinder gasoline engines by 2013. Initially, the factory will produce 100,000 engines a year, with plans to increase annual production to 250,000 units.

The new technical center will be responsible for vehicle testing and adaptation, plus R&D with suppliers. Xu further mentioned that Beijing Auto is in talks with partner Hyundai Motor Co. to develop a China-only brand which produces electric vehicles.

Earlier this September, Chinese media had revealed that the two partners might do so. The first EV may be launched by the end of this year, Xu stated. Nissan Motor Co. and Daimler have already revealed plans to launch EVs in China. The government is targeting 1 million EVs to be on the road by 2015, according to the Ministry of Science.